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June 4, 2013

Africa takes centre stage at IATA’s Annual General Meeting in Cape Town

As IATA opened only the third of 69 AGMs to take place in Africa, it became clear that both the host continent and the aviation industry regard each other as a critical match to future development.

“Nowhere is there more potential for aviation growth than in the continent of Africa,” said Tony Tyler, IATA’s Director-General in his welcoming remarks to delegates in Cape Town.

Tyler was followed to the podium by Malusi Gigaba, South Africa’s Minister for Public Enterprise and the Republic’s Deputy President Kgalema Motlanthe.

Mr Gigaba highlighted a lack of suitable transport infrastructure – much of it still reflecting colonial interests in Africa – as well as safety issues among the factors responsible for “a glaring market failure: the inability to connect the continent by air.” He challenged the regions’ airline success stories, Ethiopian Airlines, Kenya Airways and South African Airways, to “ensure Africans can fly from one country to another without stopping over in Europe or anywhere else.”

Deputy President Motlanthe also stressed inter-connectivity within Africa as a key issue for facilitating socio-economic development.

Later in the day, a prestigious panel chaired by CNN’s Africa bureau chief Kim Norgaard discussed “Unlocking Africa’s Potential”. Mr Norgaard opened the discussion by highlighting some of the opportunities and challenges of the continent. On the positive side, he listed a population of more than 1 billion, with a very young demographic aspiring to faster development. In addition he pointed out that the political conditions necessary for aviation growth were also more promising than ever with improved governance throughout Africa and a more stable, peaceful political environment than the continent has been renowned for. In trade terms, the continent is rich in natural resources and also has more than 60% of the world’s uncultivated agricultural land.“The importance of the aviation industry for supporting growth and development is indisputable,” said Mr Motlanthe. “Not only is the industry important for tourism and travel but it is also an important contributor to socio-economic inter-connectivity and trade in an increasingly globalized world. It is hard to imagine we can transform Africa’s structural growth without a concomitant improvement in Africa’s aviation industry.”

A couple of telling statistics also confirmed there is unquestionable scope for growth. Only 10 per cent of Africa’s current aviation traffic is inter-African and of the inter-continental flights coming in and out of Africa, almost 83 per cent is flown by non-African carriers.

“They have to understand that when you milk a cow, you have to feed it too. They have to realise that they need to address taxation,” he said. Kenya Airways, regarded as one of the local champions, would likely be one of the major beneficiaries of any future inter-African growth. Titus Naikuni, its chief executive officer, urged African governments to do more to help the development of the sector in terms of breaking down the protectionism that has denied many airlines routes into other countries but also by ending punitive tax regimes.

His point was reiterated by Bernard Gustin, chief executive officer of Brussels Airlines, who pointed out that it was often the unpredictability and rapid political change that was the enemy of growth.

A wide-ranging discussion followed in which much of the focus was on how African carriers themselves might emerge to champion future development, perhaps in partnership with wealthier and stronger overseas carriers – such as Etihad, whose CEO James Hogan also participated.

Despite a discussion that focused firmly on Africa’s problems, each of the panelists remained optimistic that the future was bright when Mr Norgaard asked them to predict where the continent might be in 5 years.

Elijah Chingosho, Secretary General of the African Airlines Associations, was positive about the contributions his members could make: “I think in 5 to 10 years we may start to see the emergence of large carriers for the continent. Perhaps Kenyan, Egypt Air, South African, Air Maroc, Air Algerie. They may be approaching having hundreds of aircraft and I think this will be key to providing a truly global airline with market leadership.”

George Uriesi, CEO of the Federal Airports Authority of Nigeria, admitted that it was time for action and investment to stimulate demand. “We have been pfaffing around for a long time now, “ he said. “We have to be clear that when demand comes, you invest in infrastructure. There’s a lot of potential capacity coming and it will drive growth.”

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